Specialist suppliers and retailers are warning of further price inflation and supply issues as rules for importing goods from the EU come into force this month.
“With the continuing challenges of supply chain, Covid, lorry drivers and packaging, putting more barriers to trade in the way of food and drink imports is the last thing the industry needs,” says Paul Hargreaves, founder & chief executive of distributor Cotswold Fayre.
Yet such a barrier came crashing down this month in the shape of changes to customs rules. A temporary relaxation of customs and VAT regulations, which was introduced in the wake of Brexit to help ease transition, came to an end on 1 January.
As a result, a business importing goods from the EU must now make full customs declarations when they or their courier brings them into Great Britain. (Rules for Ireland and Northern Ireland are not being changed, while discussions over the Northern Ireland Protocol continue.)
In practical terms, the change means a lot more paperwork for businesses and has prompted fears of increased costs, disruption and some EU food producers giving up on supplying into Britain.
According to global logistics & supply chain firm PML, the change has generated an extra 30 minutes’ paperwork for even a smooth-running consignment, and hours of work for more complex assignments. PML has set up a dedicated office to cope with the additional paperwork and taken on an extra 50 clerks.
Some businesses, including Cotswold Fayre, which imports from a range of EU countries and distributes goods to farm shops and delis in the UK, worked ahead of the regulatory change to mitigate some of the impact. Hargreaves says the business also bought itself some time by holding more stock of lines that might be affected.
The Federation of Small Businesses (FSB) points out there is additional burden for those dealing with products of animal origin, as they need to pre-notify the authorities of all imports.
The changes are likely to hit small operators harder than larger businesses, warns FSB international affairs head James Sibley.
“Some will struggle with the complexity of using new government systems for importing and may well be unable to afford to pay a customs agent or freight forwarder to help with the red tape,” he says.
“With more limited resource than their larger counterparts, all the new admin requirements will leave them spread more thinly.”
Most in the industry agree the changes will contribute to further rises in prices.
“The price of many foods has already increased, and this is due to the escalating costs associated with moving products from the original production site to the retailer,” says PML MD Mike Parr.
Businesses also fear the extra red tape will have the knock-on effect of deterring more EU suppliers from exporting into the UK.
“The best chocolate comes from abroad and we are already seeing a steady decline in availability that will only get worse with time,” says Charlotte Nemeth of Ingleton’s Seasons Bakery, winner of a 2021 Farm Shop & Deli Show Retailer Award.
Time spent sourcing new suppliers is eating into time that would have been spent developing new products, she adds. “The increase in checks will push more companies into cutting ties with us, which will leave the UK without supplies and we will see a massive drop in products available.”
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Distributor RH Amar, which is working with European brands and suppliers to mitigate the impact of the changes, is more upbeat.
“In practical terms, it’s more paperwork and a new way of doings things for us and our European brand partners and suppliers, but the UK remains an important market and opportunity, so there’s a willingness and commitment to make it work,” says RH Amar commercial director Justin Burbage.
When it comes to helping businesses cope with the issues, he would like to see more consistency with timelines, he adds. “The occasional u-turn and changing deadlines has certainly been one of the biggest challenges.”
Parr at PML feels the government and its advisors are failing to listen to those working on the front line. “The handling of Brexit and its impact on our industry has been shambolic,” he says.
“We had to employ teams of people to try and keep up to speed with the constant changes, which were still being modified as late as the first week of January 2021 and, one year on, the Brexit confusion continues.”
The situation with European suppliers has also been worsened by the extension of London’s Low Emissions Zone to include Heathrow. Many vehicles operated by European hauliers are not compliant with Euro VI emissions standards, which mean they face daily charges range from £100 to £300 per day and penalty charges of up to £500, Parr says.
“Many of the European hauliers that we work with to deliver food are not and are now refusing to come to Heathrow because of the unacceptably high charges.”
Parr wrote to the Mayor of London Sadiq Khan in May 2021 about the issue, but has not had a response.
The FSB would like to see the government relaunch the SME Brexit Support Fund, which closed in June last year and offered up to £2,000 to help with training or professional advice. The federation said a new scheme should have more sensible eligibility criteria, reasonable application deadlines and an international focus.
The government already operates an Export Support Service for businesses selling goods or services overseas, and the FSB is calling for the creation of an Import Support Service.
“With increasing attention being paid to supply chains, we cannot afford for more small businesses to stop importing simply because they don’t have the support they need to comply with complex new rules,” points out Sibley.
Such support will become more vital in the run-up to 1 July this year, which will bring certification and physical checks for all meat and meat products, and 1 September when certification and physical checks will be introduced for all dairy products.
These further changes are expected to particularly affect delicatessen products and artisanally produced fine foods. These are typically produced in low volumes and producers may find it difficult to meet the demands of certifications.
This could in turn affect supply. The July and September changes may also affect meat and dairy imports from Ireland, depending on how negotiations over the Northern Ireland Protocol progress.
Combined with the ongoing logistics problems, labour issues and the pandemic, the 2022 customs changes are set to be a headache for many in the specialist food industry.
As Parr puts it: “Until government is prepared to listen to those who are working in the field – and then take the relevant action – I’m afraid I can only see the situation worsening.”
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